How Google made profit by buying Motorola for $12.5 Billion and selling at $2.91Bn

Google made a strategic move by buying Motorola at a price of $12.5 billion but later only sold it for $2.91 billion. How this move helped google to establish itself as a power source in smartphone industry is quite impressive and will make you respect Google’s cunning business policies.

The main motive behind acquiring Moto was to establish itself as a virtuoso in smartphone industry by acquiring a chunk of patents owned by Motorola and the second one being teach Samsung a lesson to not mess with Google anymore.

WHAT LED GOOGLE TO BUY MOTOROLA

Samsung shares 81% of Android’s marketshare by making it reach the users and keeping Google as a pioneer position also went a ambitious thinking it can take credits for Android’s success and meanwhile also develop a platform of it’s own and hence replace market by it.

Samsung started hiding most of the native android apps and taking credits for a successful smartphone by hiding out Android. Pushing Google on the backfoot, Samsung started a company called TouchWiz, whose purpose was to modify the Android (apps) in such a way that it was unrecognisable. Remember native Samsung apps? Yes those.

Later, Samsung also started to modifying basic softwares like e-mail, calendar, voice control, notifications, dialers etc which somehow resulted in downfall of Android and devices getting slower and dysfunctional. TouchWiz was a sinking ship which was also taking Android with itself. If this wasn’t enough, Samsung decided to put Touchwiz in TVs. Being a pioneer in television section, Samsung started building Tizen, Android’s counterpart but for SmartTVs. Using the same interface as that of TouchWiz Samsung had strategy to further replace Android in handsets with Tizen. By this time Google understood that if it goes like this, Android will fail and it had act, in such a way that it will teach it’s competitors a lesson for life.

WHAT HAPPENED WHEN GOOGLE BOUGHT MOTOROLA

Answer to this issue was buying Motorola for $12.5 billion. Not only the hanset manufacturing units, but also 20,000 patents which came with it. Also giving statement that this won’t compromise it’s relationship with other business partners. WINK WINK. Though, partners didn’t believe into this and started reacting. They were afraid Android OS with a Motorola handsets under Google will result in their sales loss.

Google launched Moto phones with stock Android OS and implemented a policy for others to use the same stock OS rather than modifying them. Google gave permissions to modify stock ROM, but at a very large price. Which wasn’t that feasible for any smartphone giant. Not even Samsung. Hence, forcing everyone to use standard Android OS. Google’s AdSense (Advertising business) revenue was enough for it to save it’s expenses in promoting Moto devices, which gave fears to Samsung. Thus, no one wanted to challenge Google this time.

To prove others that Google/Android doesn’t need any other manufacturers support, Google launched Motorola Moto X and Motorola Moto G. The success of Moto X and Moto G was enough to make others sweat As a result, in 2014 Samsung signed many contracts with Google that it will not modify Android apps and rather work on it’s development. This treaty will last for a decade and made Samsung tone down TouchWiz.

To restore faith in other handset manufacturers, Google sold Motorola Mobility to Lenovo within 2 days of deal with Samsung. Making it look like a simultaneous deal. The sale did not included the 20,000 patents Google had bought earlier. Google kept those patents and Moto Labs worth $3.5 billion.